The current issue and full text archive of this journal is available at www.emeraldinsight.com/1754-2731.

htm

TQM 21,1

Assessing performance of management institutions

An application of data envelopment analysis
Roma Mitra Debnath
IGSM, Greater Noida, Uttar Pradesh, India, and

20

Ravi Shankar
School of Management, Asian Institute of Technology, Pathumthani, Thailand
Abstract
Purpose Utilizing data envelopment analysis (DEA), this paper seeks to examine the performance of 20 Indian B-Schools, separating their protability and marketability. The technique allows one to identify those management institutions which are able to utilize their resources in a most efcient way such that the overall goals of the organization are satised and total outcome maximized. If a management institution means to be effective in developing professionals who are going to be competent leaders and managers, then it would be useful to know the performance of the management institutes. However, measuring the performance of management institutes has received very little attention compared with other industries because it is difcult to measure its output. Design/methodology/approach A DEA model is used to evaluate the relative efciency of a group of decision-making units (DMUs) in their use of multiple inputs to produce multiple outputs where the form of production is neither known nor specied as in the case of parametric approach. Findings The paper ranks management institutes from various points of stakeholders. The main ndings are how much of the benet from ranking of the B-Schools is credited because of its efciency in converting the inputs to outputs. Does the ranking of any institution depend on scale of operations (scale efciency) or is it only based on technical efciency? Technical efciencies are identied with failures to achieve best possible output levels and/or usage of excessive amounts of inputs. Practical implications As Indian management schools widely publicize job offers with six gure salaries, managerial value addition, national ranking etc. provide an important impression about the management institutions. However, the reported results of experiments on input and output measures do not seem to differ between the ten best run institutes and the next ten institutes in terms of scale efciency. Originality/value The paper is one of the few written from the Indian perspective. Keywords Management training, Performance measures, Resource efciency, Data analysis, Business schools, India Paper type Research paper

The TQM Journal Vol. 21 No. 1, 2009 pp. 20-33 q Emerald Group Publishing Limited 1754-2731 DOI 10.1108/17542730910924727

Introduction Management studies originally established in the USA were adopted in Europe in the 1960s. Since then it has gathered a global acceptability. Large numbers of management schools are operating around the globe and they encounter a strong competition for students. Management is an area where the individuals are developed within the area of management. The aim of MBA programme is to prepare their graduates for managerial roles, help them to acquire a better understanding of the industrial and

business world and enriching them with relevant skills and competencies for their careers. In other words it is generally agreed that management education adds value to a student. However, in management education what kinds of values are added has not been resolved in a widely accepted manner. Boyatzis and Renio (1989) indicate some positive attributes gained from MBA studies. Espey and Batchelor (1987) report how the company gained from the students carrying out projects and writing reports relating to the needs of the company, thus making the graduates better managers. Yet despite all the rhetoric, few signs of substantive change are evident in most of the B-schools. Fiekers et al. (2000) discussed how to benchmark the postgraduate admission process in their paper. Wan Endut et al. (2000) discussed the benchmarking process of higher educational institute. Shaw and Green (2002) and Laugharne (2002) discussed the benchmarking process of academic process and the PhD programme respectively. The gap found in the existing literature is the ranking of the management institutes on the basis of efciency. The aim of this paper is to present the result of an empirical study which explored the efciency of MBA institutes. The research question for this paper is: How much of the benet from ranking of the B-Schools is credited due to its efciency in converting the inputs to outputs. Does the ranking of any institution depend on scale of operations (scale efciency) or is it only based on technical efciency. After achieving a gigantic growth of 10.9 percent in service sector, a wide opportunity has been created by the service sector in India. Though business education started in nineteenth century in India, but presently there are about 1000 B-schools operating within the country. Leaving few top end institutions like IIMs, IITs, XLRI etc. most of the institutions are B and C category catering to the needs of the society. Many magazines and professional journals publish ratings of these management institutions. Business World (2005) ranked 100 B-Schools in India, which attracted a huge amount of interest among academicians, employers and students. The parameters considered for the ranking of these institutions are faculty prole, placement, and research done by faculty, teaching aids and admission applications. A predened weight is given to these parameters and overall performance is measured out of 1000 points. Although Business Worlds survey did not rank the MBA programmes in terms of efciency, one may wonder if there is any difference between groups of institutes (e.g. top 10 versus next 10). Does one institution add more value than another? This paper tries to examine the relevance of lesser-known institutions against the backdrop of ever increasing demand of society and the value addition to the students. Being a primary customer, the students may be eager to know as to how much value is added against the fees paid by them. They may have the opportunity to get through more than one institution but to decide the best institution on basis of value addition still remains ambiguous. Another stakeholder, the society might be interested to know how the resources are being used to produce the output so that it can subsidize the management education. Some institutions do receive funds from corporate, government and other various sources. Some of the business schools might be offering a very good placement but corporate are not concerned how efciently these B-schools are using their resources to produce the managers. It would be valuable information for the prospective MBA student and for the society at large whose

Assessing performance

21

TQM 21,1

22

resources are used in the complete process. In general, this information would be useful in making decision regarding the optimum allocation of funds to make the institution more competitive. The aim of the paper is to estimate and compare efciency of 20 Indian management institutions and the analysis is supposed to verify or reject the hypothesis that the ranking of an education institute is not solely decided by tangible parameters like placement, salary, number of faculty etc. but intangible factors like customers satisfaction, vision of the management also plays a signicant role in the ranking of the institute. An educational institute must not emphasize only on converting a set of inputs to outputs but it should also focus to increase the customers satisfaction while operating under many disadvantageous positions. This paper also tries to establish a theory that efciency and customer satisfaction are positively correlated. It also attempts to nd whether different methods used for performance measure signicantly different from each other or not. Data envelopment analysis (DEA) In management contexts, mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one, which is best. In this capacity, mathematical programming serves this role and employs mathematical programming. Data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluation of the relative efciency of management accomplishments, however they may have been planned and evaluated (Banker et al., 1984). The aim of a central unit is to allocate resources in such a way that the overall goals of the organization are satised as well as possible, or specically, the amount of the total outputs of the units will be maximized (Korhonen and Syrjanen, 2004). DEA model is used to evaluate the relative efciency of a group or units of decision-making units (DMUs) in their use of multiple inputs to produce multiple outputs where the form of production is neither known nor specied as in the case of parametric approach (Shammari and Salimi, 1998). As a consequence, the DEA efciency score for a specic decision making unit (DMU) is not dened by an absolute standard, but it is dened relative to the other DMUs in the specic data set under consideration. Farrell (1957) is known as the pioneer to develop DEA to solve the problem, which requires careful measurement but also has a limitation of combining the measurements of multiple units to measure the overall performance. Later on Charnes et al. (1978) generalized Farnells framework and popularised the concept. Berger et al. (1997) and Seiford (1996) conrmed of DEA application in previous research and other DEA works that contain more than 1,000 DEA contributors in the past two decades (Sueyoshi, 1999). The two most frequently applied models used in DEA are the CCR model after Charnes et al. (1978) and the BCC model after Banker et al. (1984). The basic difference between these two models is the returns to scale (RTS). While the latter takes into account the effect of variable returns- to- scale (VRS), the former restricts DMUs to operate with constant returns- to- scale (CRS). Charnes et al. (1978) developed DEA to evaluate the efciency of public sector non-prot organizations. DEA aims to measure how efciently a DMU uses the resource available to generate a set of outputs and DMUs can include manufacturing units, departments of big organizations such as universities, schools, bank branches, hospitals, power plants, police stations, tax

ofces, defence bases, a set of rms or even practising individuals like medical practitioners etc. A mathematical explanation on DEA is being provided in appendix. However, a graphical explanation is being provided in this section for a better understanding of the readers. Figure 1 portrays the situations under CCR and BCC to be considered in terms of a single output, in amounts, y, and a single input, in amounts x. As it is evident from Figure 1 that DMU A is assigned to 100 percent efciency in the case of CRS assumption, all the other DMUs are considered 100 percent efcient case of the VRS assumption. This is also an indication that the inefciencies assigned to DMU B, C and D are purely due to their scales of operation. Only DMU E is inefcient in case of both CRS and VRS assumptions. The best performing DMU is assigned an efciency score of unity or 100 percent and the performance of other DMUs ranges between 0 and 100 percent relative to this best performance. For inefcient DMU (Efciency , 100 percent), DEA measures the slacks in each of the input and output variables and also derive a reference group of efcient units with which they can be directly compared (Cooper et al., 1999). DEA result also helps to improve the productivity of these relatively inefcient units without reducing quality of service and while maintaining or even increasing the volume of services provided by DMUs. Ruggiero (2001, 2004) discussed the application of DEA in education sector, Vassiloglou and Giokas (1990), Zenios et al. (1999), Rouatt (2003) discussed various application of DEA in banking sector to improve the performance, Sherman (1984) used DEA in hospital sector, Lewin et al. (1982) used DEA in court system. A unique feature of the DEA approach is to measure global Technical Efciency (TE) of a decision making units in relation to other units and decompose it into two multiplicative parts: pure technical Efciency (PTE) and scale efciency (SE). While technical efciency (TE) measures the rms success in producing maximum output

Assessing performance

23

Figure 1. CRS and VRS efcient frontiers for the DMUs A, B, C, D and E

TQM 21,1

24

from a given set of inputs, the scale efciency (SE) measures the rms success in choosing an optimal set of inputs with a given set of input-output prices or costs. The CCR model estimates the global technical efciency of a DMU while the BCC model takes into account the variation of efciency with respect to the scale of operation and hence measures Pure Technical Efciency. For any rm j one has the product PTEj SEj TEj . Thus, the overall inefciency (TE) of any rm is caused by the inefciency operation of the rm (PTE) and at the same time by the disadvantageous condition of the organization (SE). This becomes clear when one sets up a scale efciency model by which inputs are optimally determined by minimizing the total output costs measured in terms of market prices of inputs. DEA modelling allows researcher to select the inputs and outputs in accordance with a managerial focus. This is one of the advantages of DEA sine it also focuses on sensitivity analysis. Furthermore, this approach does not require any standardization of the different units. However DEA also has some limitations. The DMUs, which are identied as inefcient, are in relation to others in the sample. It may be possible for a DMU not included in the sample has a better efciency than the efcient DMU in the sample. Problem denition In India, the existing monitoring organization All India Council for Technical Education (AICTE) is responsible for evaluating the performance of the institutions through the process of accreditation. The evaluation process is based on a set of broad-based criteria and these criteria serves to assess the principal feature on the institutional activities and programme effectiveness. Emphasis is given on entry qualication, intake of the students, duration of the course, structure of the programme, examination rules and regulations, infrastructure norms like computer facilities, library, teaching aids, etc. However, these norms and rules do not help to measure the performance of any institutions. Harris (1994) presented a generic approach to higher education. Primarily, a customer oriented approach where the service to students is promoted through training and development. Secondly, a staff focus approach which tries to enhance the contribution of all the member of staff to the effectiveness of the institute and nally focus on service agreement. This denition reects the unique characteristic of the education. An education process involves input, output and several others factors. Education process is a multi dimensional activity and only one indicator cannot assess it. Leaving the few top institutions in India, rest of them can be categorised into private and government owned B-schools. Since intake of these colleges is not of high quality and the objective of the management is to make quick money by spending least. Therefore, the focus on quality value addition becomes a necessary step. A performance measure helps in monitoring strategic achievements and controlling the strategic movements of the institutions as it is strongly related to objectives of the institutions. There are very few papers available in the literature for measuring the performance of the management institutions. Haksever and Muragishi (1998), Dreher et al. (1985), Hamlen and Southwick (1989) studied the quality and value of management education. For this research, 20 B-schools are considered for the performance evaluation. All these intuitions are afliated to AICTE and participated in the ranking organized by

world. Out of these B-schools, 10 are located in Northern India, three are in Eastern and Western part of India and four are in Western part of India. These institutions have been evaluated by DEA on the basis of three inputs and three outputs. The broad objectives of management institutes are to prepare professionally qualied personnel in the area of management, and to prepare the graduates for lifelong learning experience to meet society needs. To achieve these objectives, the management institutes need various parameters like highly qualied, motivated and committed faculty members, talented students with adequate background and a vision for growth. The various outcomes of management institutes are qualied graduates who have acquired skills/competencies and a good placement. Another important parameter, which is also needed for the growth of the institution, is satisfaction of the students. Today, education sector is considered as a service sector as explained by Sallis (1993), and student is seen as an active participant in this process rather than as a product or outcome. The customers dene quality and therefore it is necessary to understand their needs and expectations/requirements. There are different views and opinions to dene good performance of a management institute. Ideally the performance evaluation system would give us a fair idea of how various resources (inputs) are being used to attain the services (output). In our case, a management institute is said to be efcient if it is able to use its resources in an optimum way to achieve its full efciency. This paper considers some relevant parameters, which would be useful in measuring the performance of the technical institutus. The selection of input and output variables is crucial for DEA as ill-dened variables could lead to the erroneous conclusion. In line with the AICTE recommendation and Business Worlds ranking, the various parameters are chosen in such a way that they reect the actual objectives as accurately as possible. The various parameters considered are intake capacity, annual fee, number of faculty, average salary offered at the time of placement, students satisfaction and the managements vision for the growth. The secondary data were used from the respective institutes website for the quantitative information. Since some of the parameters are qualitative in nature like students satisfaction and the vision of the management, the qualitative responses (feedback) were gathered and analysed along with other quantitative parameters through DEA. To measure students satisfaction and the vision of the management, the opinions were taken on a scale of 1-7 likert scale. Cronbachs coefcient (a) is calculated to test the reliability and internal consistency of the responses. The value of Cronbachs a found to be 0.80. This value is considered to be consistent as reported in Cronin and Taylor (1992) and Parasuraman et al. (1988). The descriptive statistics are calculated and depicted in Table I. As per the conventional method, pre dened weights are assigned to various parameters This could be misleading in case of handling qualitative factors as the personal judgement varies from expert to expert and it could have a negative affect on the performance evaluation of the various institutes. Because of intangible parameters, assessing of the performance becomes a difcult job but this paper tries to integrate both tangible and intangible attributes in the analysis. Important statistics relating to the sample are summarised in Table I. The standard deviation reects the average deviation from the mean value of the parameters. The maximum deviation can be seen in average salary of the students followed by fees. However the parameter vision has the least variation. Other useful statistics are average explaining the mean of the

Assessing performance

25

TQM 21,1

data set, total number of observations, minimum and maximum value and range which is the difference between the maximum and minimum observations. Empirical analysis This section presents the principal outcome, which reects the relative efciency of the management institutes after evaluating under DEA-CCR and DEA-BCC (output-oriented model under the constant returns to scale (CRS) and variable returns to scale (VRS) assumptions respectively). The efciency of all the institutions has been evaluated and DEA efciency scores are also calculated by running the appropriate model. The DEA-solver-LV software, version 1.0, by Kaoru Tone is used for the calculation of DEA scores, slacks, and return-to-scale (Cooper et al., 2000). It is clear from Table II that the DEA-BCC model yields higher average efciency estimates than the DEA-CCR model. The respective average values of 0.90 and 0.80 and where an index value of 1.00 equates to perfect or maximum efciency. Also in terms of consistency, BCC model proves a better model than CCR, as the standard deviation is lower in case of BCC model. Table III outlines the efciency obtained on 20 management institutes under constant return to scale (CRS) and variable return to scale (VRS). 8 and 5 out of 20 management institutions included in the analysis are identied as efcient when the DEA-BCC and DEA-CCR models are applied respectively. The result that the DEA-BCC model yields more efcient management institutes is not surprising since a DEA model with an assumption of constant return to scale provides information only on technical efciency while a DEA-BCC model with an assumption of variable returns of scale identies pure technical efciency alone.

26

Total

Intake 20

Fee 20

Faculty 20

Average salary 20

Vision 20

Satisfaction 20 3.9805 4.2500 79.61 1.02 6.10 5.08 1.46617 2 0.014

Table I. Descriptive summary of the variables

Mean 121.5000 152,025.0000 27.3500 279,000.000 4.9250 Median 120.0000 157,000.0000 24.5000 272,500.000 5.0500 Sum 2,430.00 3,040,500.00 547.00 5,580,000.00 98.50 Minimum 60.00 33,500.00 8.00 12,000.00 2.00 Maximum 180.00 247,000.00 45.00 460,000.00 7.10 Range 120.00 213,500.00 37.00 448,000.00 5.10 SD 28.33540 52,713.34471 10.32256 103,538.44951 1.37935 Kurtosis 2.366 0.990 20.793 1.178 2 0.564

BCC Table II. The comparisons of efciencies between BCC and CCR models No. of DMUs Average SD Maximum Minimum 20 0.904519 0.118685 1 0.599218

CCR 20 0.807223 0.159051 1 0.480119

Technical efciency Pure technical efciency Scale efciency DMU DEA CCR DEA BCC DEA CCR 4 DEA BCC Returns to scale A B C D E F G H I J K L M N O P Q R S 1 0.724882133 0.76664465 1 0.647177108 1 0.687208768 0.926362297 0.593103632 1 0.480119454 0.764502762 1 0.566285326 0.82992074 0.929180887 0.829063475 0.905189267 0.825363276 1 1 0.828794055 1 0.762848737 1 0.861780093 1 0.599217986 1 0.935196687 0.931294153 1 0.752450554 0.891122278 1 0.950145459 0.917971259 0.987186846 1 0.724882133 0.925012245 1 0.848368852 1 0.797429383 0.926362297 0.98979611 1 0.513388745 0.820903643 1 0.752588092 0.93132083 0.929180887 0.872564792 0.986075825 0.836076048 Constant Decreasing Decreasing Constant Decreasing Constant Decreasing Decreasing Constant Constant Decreasing Decreasing Constant Decreasing Decreasing Decreasing Decreasing Constant Decreasing

Assessing performance

27

Table III. Efciency under DEA-CCR and DEA-BCC models

It is an interesting subject to investigate the sources of inefciency that a DMU might have. The CCR model postulates that the radial expansion and reduction of all observed DMUs and their nonnegative combination are possible and hence the CCR score is called global technical efciency. On the other hand, the BCC model assumes the convex combination of the observed DMUs as the production possibility set and the BCC score is called local pure technical efciency. If a DMU is fully efcient (100 percent) in both the CCR and BCC scores, it is operating in the most productive scale size because it enjoys the maximum possible economy of scale (Cooper et al., 2000). Technical efciency describes the efciency in converting inputs to outputs while scale efciency recognizes that economy of scale cannot be attained at all scales of production and that there is one most productive scale size (MPSS) where the scale efciency is maximum at 100 percent. (Ramanathan, 1966). The decomposition of scale efciency which is dened as Technical efciency/Pure Technical efciency depicts the source of inefciency whether it is caused by inefcient operation (PTE) or disadvantageous conditions displayed by scale efciency (SE) or by both. The result exhibited in Table III depicts that DMUs A, D, F, J and M have attained MPSS whereas rest of the institutes are inefcient in terms of inefcient operations and disadvantageous condition both. Since the model used in this paper is output oriented, decreasing return to scale implies that an increase in a units inputs result in a less than proportionate increase in its outputs. This result implies scale efciency is a major problem across all the institutions included in the sample. A one way ANOVA of the efciency for the DEA-CCR and DEA-BCC analyses indicates that the efciency measures calculated using these two different approaches are not signicantly different at the 1 percent and 2 percent level of signicance as

TQM 21,1

28

p-value is greater than 0.01 and 0.02. Table IV reects that calculated F value is less than critical F value so we may accept the hypothesis that there is no signicant difference between two methods of efciency. A Spearmans rank order correlation coefcient between the efciency rankings derived from DEA-BCC and DEA-CCR is 0.70. The positive and high Spearmans rank order correlation coefcient indicates that the rank of each rm derived from applying the two different models is similar. A combination of ANOVA and Spearmans rank order correlation coefcient leads to the conclusion that the efciency estimates yielded by the two approaches are similar and follow the same pattern across management institutes. As far as individual institutions are concerned, Table III also reports the return to scale properties. Of the 20 management institutions, all 5 scale efcient institutions show constant return to scale. Rest of them show decreasing return to scale except DMU R, which shows a constant return to scale, being an inefcient institution. Empirical result also reveals that there exists substantial waste in the operation of the institutions in the sample. For instance, the average efciency of institutions derived from applying the DEA-CCR model amounts to 0.80. This indicates that in theory, the management institutions under study can, on average, dramatically increase the level of their output to 1.25 (1/. 80) times as much as their current level while using the same inputs. Figure 2 plots the tendency for the relationship between efciency scores and students satisfaction level. Since the Pearsons correlation coefcients of the students satisfaction are 0.54 and 0.17 with DEA-BCC and DEA-CCR models. Both the correlations are signicant at 5 percent level of signicance. It appears that its scale of operations signicantly inuences the efciency of a management institute and that there is an evidence to support the existence of economies of scale in the education sector.

ANOVA Table IV. ANOVA of the CCR and BCC efciency Source of variation Between groups Within groups Total

SS 0.094665 0.78767 0.882335

df 1 38 39

MS 0.094665 0.020728

F 4.56698

p-value 0.039091

F crit. 5.897959

Figure 2. Relationship between students satisfaction and efciency score

Discussion This section outlines the discussion on the result obtained on 20 management institutes. As exhibited in Table III, management institutes A, D, F, H, J, M, and P are 100 percent efcient. These institutes are efcient in terms of operations as they are able to produce maximum output from a given set of inputs (BCC 1) and they are also able to choose an optimal set of inputs (Scale Efficiency 1). However, institute B is able to produce output from given set of inputs as BCC 1 but it is operating under disadvantageous condition as the scale efciency is equal to 0.72. The institute C is also an inefcient institute as its operation is inefcient because BCC is equal to 0.82 and it is also operating under disadvantageous condition because the scale efciency is 0.92. As a result it is not globally efcient institute as CCR 0:76. The similar reason can be given for other management schools. It can be summarized from the obtained result that in terms of scale efciency, there is no signicant difference between top 10 and next 10 management institutions. Leaving only 7 institutions, that is to say A, D, F, I, J, M and R, rest of them are operating under decreasing return to scale. This suggests that scale inefcient institutions either have to increase the output level or decrease the input. However, decreasing inputs viz. number of seats, number of faculty may not be a feasible solution, in that case an emphasis must be on increasing the students satisfaction level and improving the vision towards the management education. It is quite evident from the result that over a long period of time, the business schools must consider their stakeholders rather than focussing only on prot. Also, a large number of management schools show lack of using the resources in an optimum way, resulting dissatisfaction among the students. Conclusion In the present day, the management schools have become an integral part of the economy. Especially if we are mentioning globalization of economy then the education sector should be monitored more critically. The conventional method of evaluating any educational institute is to ask the knowledgeable respondents to express their perception. This paper attempts to measure the efciency of the institutes quantitatively and rank them. It has been argued in this paper that efciency can be measured by using the inputs and outputs which are intangible in nature. Although some of the management schools are analysed in this paper, however this paper focuses on the measurement of the value in management education. Many institutes are being able to charge a high fee for their management programme. However they are not able to maintain their status and rank in the various rankings. This paper tries to answer the question. The result draws to a clear and specic conclusion that an efcient institute is able to use all its resources in an optimum way to produce the maximum output. Our purpose is not to contradict or conrm the ranking they have received in Business World (2005). The approach is to illustrate the application of DEA for the evaluation of MBA institutes on the basis of efciency. It should be remembered that the efciencies have been computed for illustration purpose. This paper tries to establish whether differences in efciency exist among some the best run institutes (e.g. if the top 10 differ from the next 10) and it does not provide any insight on efcient programmes. To add further that information on various inputs and outputs were

Assessing performance

29

TQM 21,1

collected from the websites of the respective B-schools and no such validation was done on data collection. This kind of analysis may give different efciencies even though some slight changes have been applied. As we have dealt with qualitative parameter, sometimes it is difcult to achieve a consensus. However, the experts opinion may be considered for the analysis.
References Banker, R.D., Charnes, A.W. and Cooper, W.W. (1984), Some models for estimating technical and scale inefciencies in data envelopment analysis, Management Science, Vol. 30 No. 9, pp. 1078-92. Berger, A.N., Brockett, P.L., Cooper, W.W. and Pastor, J.T. (1997), New approaches for analyzing and evaluating the performance of nancial institutions, European Journal of Operation Research, Vol. 98, pp. 170-443. Boyatzis, R.E. and Renio, A. (1989), Research article; the impact of an MBA on managerial abilities, Journal of Management Development, Vol. 8 No. 5, pp. 66-77. Business World (2005), Indias Best Schools, Business World, New Delhi. Charnes, A. and Cooper, W.W. (1962), Programming with linear fractional functions, Naval Research Logistic Quarterly, Vol. 9 No. 304, pp. 181-6. Charnes, A., Cooper, W.W. and Rhodes, E. (1978), Measuring the efciency of decision making units, European Journal of Operational Research, Vol. 2 No. 2, pp. 429-44. Cooper, W.W., Park, K.S. and Pastor, J.T. (1999), RAM: a range adjusted measure of efciency, Journal of Productivity Analysis, Vol. 11, pp. 5-42. Cooper, W.W., Seiford, L.M. and Tone, K. (2000), Data Envelopment Analysis: A Comprehensive Text with Models Applications, References and DEA-solver Software, Kluwer Academic Publishers, Dordrecht. Cronin, J.J. and Taylor, S.A. (1992), Assuring service quality: a re-examination and extension, Journal of Marketing, Vol. 56, pp. 55-68. Dreher, G.F., Dougherty, T.W. and Whitely, B. (1985), Generalizability of MBA degree and socio-economic efforts on business school graduates salaries, Journal of Applied Psychology, Vol. 70, pp. 769-73. Espey, J. and Batchelor, P. (1987), Management by degrees: a case study in management development, Journal of Management Development, Vol. 6 No. 5, pp. 61-8. Farrell, M.J. (1957), The measurement of production efciency, Journal of the Royal Statistical Society, Series A, Vol. 120 No. 3, pp. 253-90. Fiekers, T., Dale, B.G., Littler, D.A. and Vob, W. (2000), Benchmarking the postgraduate admission process, Quality Management Journal, Vol. 7 No. 4, pp. 45-57. Haksever, C. and Muragishi, Y. (1998), Measuring values in MBA programmes, Education Economics, Vol. 6 No. 1, pp. 15-26. Hamlen, W. Jr and Southwick, L. Jr (1989), Quality in the MBA program: inputs, outputs or value added?, Journal of Economic and Social Measurement, Vol. 19, pp. 1-26. Harris, R.W. (1994), Alien or ally? TQM, academic quality and the new public management, Quality Assurance in Education, Vol. 2 No. 3, pp. 33-9. Korhonen, P. and Syrjanen, M. (2004), Resource allocation based on efciency analysis, Management Science, Vol. 50 No. 8, pp. 1134-44.

30

Laugharne, M. (2002), Benchmarking academic standards, Quality Assurance in Education, Vol. 10 No. 3, pp. 134-8. Lewin, A.Y., Morey, R.C. and Cook, T.J. (1982), Evaluating the administrative efciency of courts, OMEGA, Vol. 10, pp. 401-11. Parasuraman, A., Berry, L. and Zeithaml, V. (1988), SERVQUAL: a multiple item scale for measuring consumer perceptions of service quality, Journal of Retailing, Vol. 64, Spring, pp. 12-40. Ramanathan, R. (1966), An Introduction to Data Envelopment Analysis: A Tool for Performance Measurement, Sage Publications, New Delhi, Thousand Oaks, CA, London. Rouatt, S. (2003), Two stage evaluation of bank branch efciency using data envelopment analysis, MSc dissertation, Centre for Management of Technology and Entrepreneurship. Ruggiero, J. (2001), Determining the base cost of education: an analysis of Ohio school districts, Contemporary Economic Policy, Vol. 19, pp. 268-79. Ruggiero, J. (2004), Performance evaluation in education: modeling educational production, Chapter 12, Handbook on DEA, Kluwer Academic Publishers, Boston, MA, Dordrecht, London. Sallis, E. (1993), TQM in Education, Kogan Page, London. Seiford, L.H. (1996), Data envelopment analysis: the evolution of the state-of-the-art (1978-1995), Journal of Productivity Annals, Vol. 7, pp. 99-137. Shammari, M.A. and Salimi, A. (1998), Modeling the operating efciency of banks: a nonparametric methodology, Logistic Information Management, Vol. 11 No. 1, pp. 5-17. Shaw, M. and Green, H.D. (2002), Benchmarking the PhD a tentative beginning, Quality Assurance in Education, Vol. 10 No. 2, pp. 116-24. Sherman, H.D. (1984), Hospital efciency measurement and evaluation, Medical Care, Vol. 22 No. 10, pp. 922-8. rek, D. (2005), Efciency of Banks in Regions at Different Stage of European Integration Stava Process, Economics Working Paper, Archive EconWPA, Oxford. Sueyoshi, T. (1999), DEA duality on Returns to Scale (RTS) in production and cost analyses: an occurrence of multiple solutions and differences between production based and cost based RTS estimates, Management Science, Vol. 45 No. 11, pp. 1593-608. Vassiloglou, M. and Giokas, D. (1990), A study of the relative efciency of the bank branches: an application of data envelopment analysis, Journal of the Operational Research Society, Vol. 41 No. 7, pp. 591-7. Wan Endut, W., Abdullah, M. and Husain, N. (2000), Benchmarking institutions of higher education, Total Quality Management, Vol. 11 Nos 4-6, pp. 796-9. Zenios, C.V., Zenios, S.A., Agathocleous, K. and Soteriou, A.C. (1999), Benchmarks of the efciency of bank branches, Interfaces, Vol. 29 No. 3, pp. 37-51.

Assessing performance

31

Further reading Jackson, N. (2001), Benchmarking in UK HE: an overview, Quality Assurance in Education, Vol. 9 No. 4, pp. 218-35. Roll, Y., Cook, W.D. and Golany, B. (1991), Controlling factor weights in data envelopment analysis, IIE Transactions, pp. 2-9.

TQM 21,1

Appendix The mathematical formulation of DEA model is presented in the following section as given by Stavarek (2005):
s X

ur yrs A1 vt xto

32
Subject to:

max hou; v

r1 m X t1

s X r1 m X t1

ur yrj # 1; j 1; 2; :::n vt xtj A2

Ur $ 0; r 1; 2; . . .s Vi $ 0; i 1; 2; . . .m

A3 A4

where h0 is the technical efciency of DMU0 to be estimated, ur and vi are optimal weights to be determined, yrj is the observed amount of output of the rth type for the jth DMU, xij is the observed amount of input of the ith type for the jth DMU, r indicates the s different outputs, I denotes the m different inputs, and j indicates the n different DMUs. The weights ur and vi in the objective function are chosen to maximize the value of the DMUs efciency ratio subject to the less than unity constrains. These constrains ensure that the optimal weights for DMU0 in the objective function does not imply an efciency score greater than unity, either for itself or for any of the other DMUs. The DEA model mentioned above is a fractional linear program in which the numerator has to be maximized and the denominator would be minimized simultaneously. To solve this kind of model, it is converted into linear form by following a transformation developed by Charnes and Cooper (1962) for fractional programming. It allows the introduction of a constant. This is given in equation (A5):
m X t1

vi xi0 1

A5

This means the sum of all inputs is set to equal one. The obtained linear programming problem that is equivalent to the linear fractional programming problem (equations (A1) to (A4)) for DMUs can be written as: Max z0
s X r21

ur yrj

A6

s X r1

ur yrj 2

m X i1

vi xij # 0; j 1; 2; . . .n

A7

m X t1

vi xio 1

A8

Assessing performance

Ur $ 0; r 1; 2; . . .s Vi $ 0; i 1; 2; . . .m:

A9 A10

33

Corresponding author Roma Mitra Debnath can be contacted at: roma.mitra@gmail.com

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints